What You Need To Know About Quitclaim Deeds

During the title search process on a home sale, you may hear the term “quitclaim deed.” A quitclaim (sometimes erroneously called a “quick claim”) deed is the easiest way to transfer title to a piece of property from one person to another, but lacks many of the essential protections that characterize other types of deeds. Learn what you need to know about quitclaim deeds and when they can be useful in a property transaction.

What Is A Deed?

A deed is a legal document that transfers title — the seller’s ownership interest in a property — from one party to another. To be valid and enforceable, a deed must be signed by both the buyer and seller, and must describe the property in question. Deeds to real estate are also generally recorded, or filed in the public record with the applicable state or local recorder’s office. A deed does not need to be recorded to be valid, however, failure to properly record a deed can lead to a cloud on the title and can create problems for future transfers of ownership down the line. 

What Are The Types Of Deeds?

There are six basic types of deeds. A general warranty deed is the most common type of deed in a real estate transaction. A general warranty deed confirms the grantor’s ownership and right to sell the property. It also contains a covenant against encumbrances, essentially stating that the title is held free and clear of any liens or other claims against title. The warranty deed also conveys the covenants of quiet enjoyment and of further assurance, which, taken together, are the seller’s promise that their title is superior to other claims and that the seller will take steps to clear any clouds against the title. Most crucially, this type of deed offers a covenant of seisin, which means it guarantees that the owner’s full interest is being conveyed. 

A grant deed is a less commonly used type of deed, which conveys the same protections as a general warranty deed, but only for the period in which the seller owned the property. Earlier claims against title would, however, be covered by a comprehensive title insurance policy.

A bargain and sale deed, commonly used in the case of foreclosure sales, does not provide any warranties with respect to potential liens or other encumbrances against title. If you are receiving this type of deed as a buyer, it is critically important to do a comprehensive title search and obtain title insurance, as you will have no recourse against a seller in the event of a significant defect in title.

A deed of trust, sometimes used in the context of financed properties, is signed by three parties: the borrower, the lender, and a third party known as a trustee. During the term of the loan, the trustee — usually a title company — holds title to the property. When the loan is repaid, the trustee transfers title to the borrower. 

A mortgage deed is similar to a deed of trust, but eliminates the third party trustee. During the course of the loan, the title is split, and held by both the borrower and the lender. When the mortgage is paid off in full, the title transfers to the buyer.

Finally, a quitclaim deed provides no assurances. It conveys the grantor’s interest in the property, but contains no warranties or representations that the grantor does, in fact, have any interest to convey. Similarly, it provides no assurance as to the quality of the title that the grantor is conveying. Any individual can provide a quitclaim deed to any property, whether or not they have any ownership interest or right to that property whatsoever.

Why Would I Want A Quitclaim Deed?

With an understanding of the different types of deeds, and the assurances and warranties provided by each, it’s logical for a property owner to ask: why would I ever want a quitclaim deed? Indeed, given that anyone can provide a quitclaim deed for any piece of property, whether they own it or not, such a transfer may seem essentially worthless.

However, there are a number of circumstances in which quitclaim deeds can provide an essential step in ensuring that you, as a purchaser, have clear title. The most common of these is in the case of divorce, where one ex-spouse is granting their ownership interest to the other. In this case, the grantor spouse is not making any representations as to the quality of the title they are conveying, but they are relinquishing all rights to the property to the other individual, who may now hold a warranty deed, a deed of trust, or a mortgage deed. 

The other common circumstance in which a quitclaim deed can be quite helpful is in clearing up defects or questions regarding title. If there is an indication in the public records that another individual holds some ownership interest in the property — either because of a question about inheritance or an invalid or improperly recorded earlier transfer of ownership, the individual may be asked to sign a quitclaim deed essentially disavowing their ownership interest. In this case, the person signing the deed may know that they do not have a valid claim to the property, and so would not be willing or able to convey a warranty deed. A quitclaim deed would simply be a matter of clearing up the public record to ensure that the title you receive to the property is valid and free and clear of any potential encumbrances.

Your title insurance company will work with you to identify any circumstances in which a quitclaim deed is necessary before title insurance can be issued.

Learn More With Your Trusted Title Insurance Company

Protecting your interests and assets during a home purchase with title insurance may be the most important thing you’ll ever do — and you don’t have to navigate the ins and outs of owner’s and lender’s title insurance policies alone. 

If you have questions about what title insurance can do to protect you, what it involves, or how to get it, Landtrust Title Services can help. Please contact us today at [email protected] or by phone at 312.528.9210 to get answers to all of your questions.

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